Women & Financial Literacy

Women are three times as likely as men to say they can’t afford to save for retirement and have significantly lower rates of financial literacy. Women also make up the majority of caregivers, and are three times more likely than men to quit their jobs to care for a family member.

Generally speaking, women earn less, save less, and live longer — but are still responsible for the same living expenses men pay. And since they live longer, they face additional costs, including  more long-term and overall health care expenses. Overcoming these obstacles demands serious dedication to planning.

Learning how to increase earnings and make use of available resources to the fullest potential can help you make the most of paychecks and approach financial choices with confidence.

Low literacy rates dramatically impact the lives of women, demanding they work harder, take more time to pay debts and, sometimes settle for earning less.

The U.S. Department of Education reports that 3.8 million American adult women possess literacy skills below a “basic” level. The basic level refers to reading, writing and math skills at a third-grade level. This lack of education makes it difficult to understand bank statements, credit card agreements and other financial documents.

Those who passed were more likely to have a retirement plan, as well as a plan to cover the costs of long-term care.

Women lacking competency in financial literacy face serious repercussions, such as taking on large amounts of credit card debt, defaulting on student loans, and experiencing difficulty managing income, taxes and investments.

Today women have a higher likelihood than men of completing college and graduate school. Unfortunately graduation doesn’t guarantee financial stability. Student loans follow many graduates well into careers, and women face serious obstacles when it comes to debt repayment.

As women dedicate more post-college earnings to monthly loan payments than men, they are drawing from paychecks that often are significantly smaller than a man’s income. Paying loans from their limited resources leaves less money to save for other financial priorities, like buying a home or building retirement savings.

Fatima Goss Graves, vice president for education and employment at the National Women’s Law Center, recommends women pursue career options with high earning potentials. She points out that there aren’t enough women in science, technology, engineering and math fields.

Participation in the work force has unique implications for women. An unfair wage gap and life interruptions can slow career progress and force some women to struggle with basic living expenses.

When women take breaks from their career for childbirth, raising children and taking care of elderly parents, they often sacrifice the momentum they’ve gained from working in their field. In the United States, women make up 47% of the labor force, although that number is expected to fall slightly in the coming years.

While more single women are becoming homeowners, the long-term burden of paying a mortgage is no easy task. In the 1990s, single women began outpacing single men in home ownership. They outnumber men in the categories of first-time home buyers, repeat home buyers, living alone, owning a home, and in spending half their income on housing, according to the National Association of Realtors. Twice as many millennial women compared to men plan to own homes.

If you’re spending 15 to 30 years paying a high-interest mortgage, it can make putting aside cash for emergencies and retirement savings difficult.

Women are consistently shortchanged in the housing market, according to a 2022 study from Yale University. The study found that single women buy houses for 2% more than single men on average, but they also sell those houses for 2% less.

Nearly half of marriages end in divorce and, in many cases, women encounter financial consequences with higher levels of severity than men. Legal fees, tax liabilities and complications from dividing assets make divorce expensive, and it can take years before financial recovery is possible.

Unlike other financial matters, divorce is hard to plan for. Emotional stress and household tension accompany the financial burden, and the legal process can take months or years to resolve. The majority of women retain custody of children, and struggle to make ends meet because of the high cost of child care. Some women without children also find themselves having to adjust to a lower standard of living following divorce.

A man reaching 65 today will on average live to 84.3 compared to a woman’s 86.6-year lifespan, according to the Social Security Administration. The amount of savings women need for retirement grows because of their longer lifespans.

Single women of all types — unmarried, divorced and widowed— from age 44 to 64 are underprepared for retirement. IRA and 401(k) balances fall short compared to male equivalents. Single and married women tend to focus on priorities other than retirement, like paying for their children’s needs and owning a house.

One of the worst outcomes of not prioritizing savings is missing opportunities to leverage time in your favor. Money kept in interest-bearing accounts for years can grow into a substantial asset. Employer-offered accounts include tax advantages and sometimes match plans that double savings.

The wage-earning gap also limits available Social Security benefits — a built-in foundation that some seniors rely on for retirement expenses. As a result of these challenges, fewer resources and a lack of planning, women are more likely to encounter poverty in old age and be forced to rely on government programs for living expenses.

Improve your financial welfare by making a plan for how you will use your paychecks wisely. The power to make good spending and saving choices is yours.

Check out these websites to get budget, divorce, savings help and more: